It’s Long Term Care for a Reason

The fastest way to impoverishment or to destroying a retirement income strategy or to impact multiple generations physically, emotionally, and financially is not an extended healthcare event. It is not adequately planning for such an event.

According to retirementliving.com, the cost of memory care in 2019 is:

Average memory care unit     $5,745 per month

Highest cost average               $13,216 per month      Hawaii

Lowest cost average               $4,132 per month        Arkansas

For many, recommendations that last 2, 4, or 6 years are made to defend against a long term care event – that is playing the averages and not fully addressing the situation. What is the plan when that care is needed for 8, 10, 14 years or more?

I am not diminishing the importance for those shorter duration strategies (every company in the LTC arena offers them including OneAmerica), I am saying that long duration events deliver the biggest blow to the family on many levels.

Here is our scenario – Mrs. Smith has been diagnosed with Alzheimer’s and is receiving care.  The cost of care increases over time as her needs increase.  Let’s look at how Asset Care with a lifetime benefit and $6,000 of monthly benefit and another carrier’s solution with 6 years of benefit and $6,000 of monthly benefit (in both cases annual benefit is $72,000).

  Annual Cost Asset Care Policy M  
1 36,000 36,000 36,000 begin home care ($3,000/month)
2 54,000 54,000 54,000 home care increases ($4,500/month)
3 72,000 72,000 72,000 moves to memory care unit
4 72,000 72,000 72,000 remains in memory care unit
5 72,000 72,000 72,000 remains in memory care unit
6 72,000 72,000 72,000 remains in memory care unit
7 72,000 72,000 54,000 remains in memory care unit
8 72,000 72,000 0 remains in memory care unit
9 72,000 72,000 0 remains in memory care unit
10 72,000 72,000 0 remains in memory care unit
12 72,000 72,000 0 remains in memory care unit
         
  378,000 378,000 378,000 6 years aggregate
  576,000 576,000 432,000 8 years aggregate
  864,000 864,000 432,000 12 years aggregate

Should Mrs. Smith have a moderate to short duration need – either policy will provide the same level of benefit assuming that her costs are “average” or below.  But, move that to a longer duration, and you will see that only one solution provides the depth of benefit to meet Mrs. Smith’s needs without disruption.

That is what the Care Solutions is about – the long term!